By Javier E. David and Chana R. Schoenberger Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The euro plunged Tuesday to a record low against the Swiss franc and fell to its weakest level in three weeks against the dollar, as warnings about two troubled euro-zone economies renewed concerns about the debt crisis roiling the 16-nation currency bloc.
During European trading hours, Moody's Investors Service said it was placing Portugal's credit rating on review for a possible downgrade, voicing uncertainties about the country's growth in the wake of an austerity budget designed to assuage concerns about its debt overhang. Analysts have long viewed Portugal as one of the most vulnerable economies in the euro zone.
The single currency was further undermined in the U.S. session when Fitch Ratings put Greece's ratings on review for a potential cut. Greece, the economy that last year triggered the euro zone's current sovereign debt problems, has been riven by civil strife and political instability since the introduction of fiscal belt-tightening measures.
Against the Swiss franc, the euro fell near CHF1.2550, its fifth record low in as many consecutive trading sessions, according to EBS via CQG. Heavy selling of the euro against the franc dragged the single currency under $1.31 against the dollar, a three-week low and below the 200-day moving average.
The dollar also weakened against the franc, to 95.63 centimes.
Against the Japanese yen, the dollar was at Y83.75 from Y83.73 late Monday in New York. Against the yen, the single currency traded at Y109.70, within view of its lowest level since early December.
In markets already thin ahead of the Christmas holiday, the ratings announcements coalesced to renew investors' doubts about Europe's ability to decisively confront the turmoil that has battered its single currency. This led traders to shun euros in favor of Switzerland's currency, a traditional safe harbor in times of global instability.
"The euro-zone troubles continue to plague the euro, and these ratings warnings do not help," said Kathy Lien, director of currency research at GFT Forex in New York.
The rating agencies' announcements spotlighted the ongoing fiscal problems of the euro-zone countries considered the monetary union's weaker members, said Daniel Katzive, foreign-exchange strategist at Credit Suisse. "One beneficiary has been the Swiss franc because there's an investor interest in being short dollars, but a resistance to being in the euro," he said.
While the single currency got a modest boost from news that Chinese Vice Premier Wang Qishan said his country supports the measures taken by European officials to stabilize markets, the effect proved short-lived.
To see the euro's performance against the dollar, please reference this chart:
http://www.dowjoneswebservices.com/chart/view/5171
Portugal's prime minister, Jose Socrates, said Tuesday he was "very satisfied" with the government's latest budget figures, which show the central government deficit narrowing for the first time this year. "These numbers will give confidence to the markets that we are on the right track" with our plan, Socrates said in an interview with Dow Jones Newswires.
While Moody's said the euro zone has the financial and political wherewithal to contain its sovereign-debt woes, many other market observers are skeptical about Europe's long-term prospects. As a result, they have bought Switzerland's currency despite the country's policy makers warning that the franc's strength wasn't welcome.
With the ICE Dollar Index up marginally, Deutsche Bank's PowerShares U.S. Dollar Index Bearish exchange-traded fund was down 0.23% from late Tuesday, while its PowerShares U.S. Dollar Index Bullish fund was up 0.22%. The two exchange-traded funds are based on Deutsche Bank currency-futures indexes, whose composition mirrors that of the ICE's Dollar Index.
-By Javier E. David, Dow Jones Newswires; 212-416-4564; javier.david@dowjones.com
--Andrew J. Johnson contributed to this article.
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